First quarter revenues of $4.3 billion decreased 9 percent from the same
quarter in 2015. Lower production in the North American heavy-duty truck
market and weak global demand for off-highway and power generation
equipment contributed to the reduction in sales. Currency negatively
impacted revenues by approximately 3 percent compared to last year,
primarily due to a stronger US dollar.

Revenues in North America decreased 10 percent while international sales
declined by 8 percent. Within international markets revenues in Latin
America and Asia declined the most.

Earnings before interest and taxes (EBIT) in the first quarter were $484
million, or 11.3 percent of sales, down from $562 million or 11.9
percent of sales a year ago.

Net income attributable to Cummins in the first quarter was $321 million
($1.87 per diluted share), compared to $387 million ($2.14 per diluted
share) in the first quarter of 2015. The tax rate in the first quarter
of 2016, was 28.4 percent.

“Our results for the first quarter reflect solid execution of our cost
reduction plans in the face of very challenging market conditions,” said
Rich Freeland Chief Operating Officer. “Benefits from restructuring
actions, material cost reduction projects and lower warranty costs all
helped to mitigate the impact of lower sales.”

Based on the current forecast, Cummins expects full year 2016 revenues
to be down 5 to 9 percent, and EBIT to be in the range of 11.6 to 12.2
percent of sales, unchanged from our forecast three months ago.

Effective April 2016, we re-organized our business to combine our Power
Generation Segment and our High Horsepower engine business creating the
Power Systems Segment. Going forward we will present results for four
operating segments: Engine, Distribution, Components and Power Systems.
We will begin to report results for our new reporting structure in the
second quarter of 2016 and will also reflect this change for historical
periods. “The formation of the Power Systems Segment combines two
businesses that are already strongly interdependent and will allow us to
streamline business and technical processes to accelerate innovation,
grow market share and more efficiently manage our supply chain and
manufacturing operations,” said Chairman and CEO Tom Linebarger.

Other recent highlights:

Our QSK95 diesel engine received Tier 4 Final certification from the
EPA for the US locomotive market.

We announced a joint venture with Olayan to expand access to markets
and enhance the service and support provided to customers in the
Middle East.

Ethisphere Institute named Cummins to its list of the world’s most
ethical companies for the 9th straight year.

We returned $745 million to shareholders in the form of dividends and
share repurchases in the first quarter, consistent with our plans to
return 75 percent of Operating Cash Flow to shareholders in 2016.

First quarter 2016 detail (all comparisons to same period in 2015)

Engine Segment

Sales - $2.3 billion, down 10 percent.

Segment EBIT - $200 million, or 8.6 percent of sales, compared to $253
million or 9.7 percent of sales.

Sales declined due to lower production in the North American
heavy-duty truck market and weak demand in power generation, oil and
gas, commercial marine and mining markets.

Distribution Segment

Sales - $1.5 billion, down 1 percent.

Segment EBIT - $95 million, or 6.5 percent of sales, compared to $88
million or 6.0 percent of sales.

Increased revenue from acquisitions and growth in international
markets were more than offset by lower sales in off-highway markets in
North America and the negative impact of currency.

Components Segment

Sales - $1.2 billion, down 5 percent.

Segment EBIT - $173 million, or 14.0 percent of sales, compared to
$195 million or 15.0 percent of sales.

Lower sales in North America and the unfavorable impact of currency
more than offset growth in China.

Weaker sales in most regions, with Asia and Latin America declining
the most.

About Cummins

Cummins Inc., a global power leader, is a corporation of complementary
business units that design, manufacture, distribute and service diesel
and natural gas engines and related technologies, including fuel
systems, controls, air handling, filtration, emission solutions and
electrical power generation systems. Headquartered in Columbus, Indiana,
(USA) Cummins currently employs approximately 55,200 people worldwide
and serves customers in approximately 190 countries and territories
through a network of approximately 600 company-owned and independent
distributor locations and approximately 7,200 dealer locations. Cummins
earned $1.4 billion on sales of $19.1 billion in 2015. Press releases
can be found on the Web at www.cummins.com.
Follow Cummins on Twitter at www.twittter.com/cummins
and on YouTube at www.youtube.com/cumminsinc.

Forward-looking disclosure statement

Information provided in this release that is not purely historical are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements regarding our
forecasts, guidance, preliminary results, expectations, hopes, beliefs
and intentions on strategies regarding the future. These forward looking
statements include, without limitation, statements relating to our plans
and expectations for our revenues for the full year of 2016. Our actual
future results could differ materially from those projected in such
forward-looking statements because of a number of factors, including,
but not limited to: the adoption and implementation of global emission
standards; the price and availability of energy; the pace of
infrastructure development; increasing global competition among our
customers; general economic, business and financing conditions;
governmental action; changes in our customers’ business strategies;
competitor pricing activity; expense volatility; labor relations; and
other risks detailed from time to time in our Securities and Exchange
Commission filings, including particularly in the Risk Factors section
of our 2015 Annual Report on Form 10-K. Shareholders, potential
investors and other readers are urged to consider these factors
carefully in evaluating the forward-looking statements and are cautioned
not to place undue reliance on such forward-looking statements. The
forward-looking statements made herein are made only as of the date of
this press release and we undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise. More detailed information about factors that
may affect our performance may be found in our filings with the
Securities and Exchange Commission, which are available at http://www.sec.gov
or at http://www.cummins.com
in the Investor Relations section of our website.

Presentation of Non-GAAP Financial Information

EBIT is a non-GAAP measure used in this release, and is defined and
reconciled to what management believes to be the most comparable GAAP
measure in a schedule attached to this release. Cummins presents this
information as it believes it is useful to understanding the Company's
operating performance, and because EBIT is a measure used internally to
assess the performance of the operating units.

Webcast information

Cummins management will host a teleconference to discuss these
results today at 10 a.m. EST. This teleconference will be webcast and
available on the Investor Relations section of the Cummins website at www.cummins.com.
Participants wishing to view the visuals available with the audio are
encouraged to sign-in a few minutes prior to the start of the
teleconference.

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) (a)

Three months ended

April 3,

March 29,

In millions, except per share amounts

2016

2015

NET SALES

$

4,291

$

4,709

Cost of sales

3,235

3,514

GROSS MARGIN

1,056

1,195

OPERATING EXPENSES AND INCOME

Selling, general and administrative expenses

490

517

Research, development and engineering expenses

166

195

Equity, royalty and interest income from investees (Note 1)

72

68

Other operating expense, net

(2

)

(3

)

OPERATING INCOME

470

548

Interest income

6

5

Interest expense

19

14

Other income, net

8

9

INCOME BEFORE INCOME TAXES

465

548

Income tax expense (Note 2)

132

144

CONSOLIDATED NET INCOME

333

404

Less: Net income attributable to noncontrolling interests

12

17

NET INCOME ATTRIBUTABLE TO CUMMINS INC.

$

321

$

387

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.

Basic

$

1.87

$

2.14

Diluted

$

1.87

$

2.14

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

171.8

180.6

Diluted

172.0

181.0

CASH DIVIDENDS DECLARED PER COMMON SHARE

$

0.975

$

0.78

(a) Prepared on an unaudited basis in accordance with
accounting principles generally accepted in the United States of
America.

Common stock held by employee benefits trust, at cost, 0.8 and 0.9
shares

(9

)

(11

)

Accumulated other comprehensive loss

(1,417

)

(1,348

)

Total Cummins Inc. shareholders’ equity

6,920

7,406

Noncontrolling interests

340

344

Total equity

$

7,260

$

7,750

Total liabilities and equity

$

14,827

$

15,134

(a) Prepared on an unaudited basis in accordance with
accounting principles generally accepted in the United States of
America.

CUMMINS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (a)

Three months ended

April 3,

March 29,

In millions

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income

$

333

$

404

Adjustments to reconcile consolidated net income to net cash
provided by operating activities

Restructuring actions and other charges, net of cash payments

(25

)

—

Depreciation and amortization

128

128

Deferred income taxes

(2

)

(1

)

Equity in income of investees, net of dividends

(48

)

(53

)

Pension contributions in excess of expense

(50

)

(96

)

Other post-retirement benefits payments in excess of expense

(8

)

(8

)

Stock-based compensation expense

5

5

Translation and hedging activities

(14

)

7

Changes in current assets and liabilities, net of acquisitions

Accounts and notes receivable

(98

)

(276

)

Inventories

(54

)

(98

)

Other current assets

188

20

Accounts payable

103

147

Accrued expenses

(283

)

(35

)

Changes in other liabilities and deferred revenue

78

59

Other, net

10

(30

)

Net cash provided by operating activities

263

173

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

(71

)

(100

)

Investments in internal use software

(13

)

(8

)

Investments in and advances to equity investees

(25

)

10

Acquisitions of businesses, net of cash acquired

(1

)

(11

)

Investments in marketable securities—acquisitions

(291

)

(95

)

Investments in marketable securities—liquidations

35

71

Cash flows from derivatives not designated as hedges

(26

)

4

Other, net

4

4

Net cash used in investing activities

(388

)

(125

)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings

105

2

Net borrowings of commercial paper

50

—

Payments on borrowings and capital lease obligations

(15

)

(18

)

Distributions to noncontrolling interests

(10

)

(1

)

Dividend payments on common stock

(170

)

(140

)

Repurchases of common stock

(575

)

(137

)

Other, net

(17

)

(2

)

Net cash used in financing activities

(632

)

(296

)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(39

)

(56

)

Net decrease in cash and cash equivalents

(796

)

(304

)

Cash and cash equivalents at beginning of year

1,711

2,301

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

915

$

1,997

(a) Prepared on an unaudited basis in accordance with
accounting principles generally accepted in the United States of
America.

CUMMINS INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

In millions

Engine

Distribution

Components

PowerGeneration

Non-segment Items (1)

Total

Three months ended April 3, 2016

External sales

$

1,624

$

1,458

$

897

$

312

$

—

$

4,291

Intersegment sales

710

5

340

238

(1,293

)

—

Total sales

2,334

1,463

1,237

550

(1,293

)

4,291

Depreciation and amortization(2)

58

26

27

16

—

127

Research, development and engineering expenses

97

2

54

13

—

166

Equity, royalty and interest income from investees

41

18

8

5

—

72

Interest income

3

1

1

1

—

6

Segment EBIT

200

95

173

31

(15

)

484

Segment EBIT as a percentage of total sales

8.6

%

6.5

%

14.0

%

5.6

%

11.3

%

Three months ended March 29, 2015

External sales

$

1,889

$

1,469

$

931

$

420

$

—

$

4,709

Intersegment sales

707

7

368

260

(1,342

)

—

Total sales

2,596

1,476

1,299

680

(1,342

)

4,709

Depreciation and amortization(2)

58

27

26

16

—

127

Research, development and engineering expenses

114

3

61

17

—

195

Equity, royalty and interest income from investees

30

20

9

9

—

68

Interest income

2

1

1

1

—

5

Segment EBIT

253

88

195

49

(23

)

562

Segment EBIT as a percentage of total sales

9.7

%

6.0

%

15.0

%

7.2

%

11.9

%

(1)

Includes intersegment sales, intersegment profit in inventory
eliminations and unallocated corporate expenses. There were no
significant unallocated corporate expenses for the three months
ended April 3, 2016 and March 29, 2015.

(2)

Depreciation and amortization as shown on a segment basis excludes
the amortization of debt discount and deferred costs included in
the Condensed Consolidated Statements of Income as "Interest
expense."

A reconciliation of our segment information to the corresponding amounts
in the Condensed Consolidated Statements of Income is shown in
the table below:

Three months ended

April 3,

March 29,

In millions

2016

2015

Total segment EBIT

$

484

$

562

Less: Interest expense

19

14

Income before income taxes

$

465

$

548

CUMMINS INC. AND SUBSIDIARIESSELECTED FOOTNOTE DATA(Unaudited)

NOTE 1.EQUITY, ROYALTY AND INTEREST INCOME FROM INVESTEES

Equity, royalty and interest income from investees included in our Condensed
Consolidated Statements of Income for the reporting periods was as
follows:

Three months ended

April 3,

March 29,

In millions

2016

2015

Distribution Entities

Komatsu Cummins Chile, Ltda.

$

10

$

7

North American distributors

5

10

All other distributors

—

1

Manufacturing Entities

Beijing Foton Cummins Engine Co., Ltd.

18

7

Chongqing Cummins Engine Company, Ltd.

8

12

Dongfeng Cummins Engine Company, Ltd.

7

14

All other manufacturers

16

7

Cummins share of net income

64

58

Royalty and interest income

8

10

Equity, royalty and interest income from investees

$

72

$

68

NOTE 2.INCOME TAXES

Our income tax rates are generally less than the 35 percent U.S. income
tax rate primarily because of lower taxes on foreign earnings and the
research tax credit. The effective tax rate for the three months ended
April 3, 2016, was 28.4 percent and did not include any discrete items.
Our effective tax rate for the three months ended March 29, 2015, was
26.3 percent. This tax rate included an $18 million discrete tax benefit
to reflect the release of reserves for uncertain tax positions related
to a favorable federal audit settlement.

Net income and diluted earnings per share (EPS) attributable to
Cummins Inc. excluding special items

We believe these are useful measures of our operating performance for
the periods presented as they illustrate our operating performance
without regard to special items including tax adjustments. These
measures are not in accordance with, or an alternative for, accounting
principles generally accepted in the United States of America (GAAP) and
may not be consistent with measures used by other companies. It should
be considered supplemental data. The following table reconciles net
income attributable to Cummins Inc. to net income attributable to
Cummins Inc. excluding special items for the following periods:

Three months ended

April 3, 2016

March 29, 2015

In millions

Net Income

Diluted EPS

Net Income

Diluted EPS

Net income attributable to Cummins Inc.

$

321

$

1.87

$

387

$

2.14

Less

Tax benefit

—

—

18

0.10

Net income attributable to Cummins Inc. excluding special items

$

321

$

1.87

$

369

$

2.04

Earnings before interest, income taxes and noncontrolling interests

We define EBIT as earnings before interest expense, income tax expense
and noncontrolling interests in income of consolidated subsidiaries
(EBIT). We use EBIT to assess and measure the performance of our
operating segments and also as a component in measuring our variable
compensation programs. This measure is not in accordance with, or an
alternative for, GAAP and may not be consistent with measures used by
other companies. It should be considered supplemental data. Below is a
reconciliation of EBIT to “Net income attributable to Cummins Inc.” for
each of the applicable periods:

In the first quarter of 2016, our Power Generation segment reorganized
its reporting structure to include the following product lines:

Power generation - We manufacture generators for commercial and
consumer applications ranging from 2 kilowatts to 3.5 megawatts, as
well as paralleling systems and transfer switches for applications
such as data centers, health care facilities and waste water treatment
plants. We also provide turnkey solutions for distributed generation
and energy management applications using natural gas or biogas as a
fuel. The business also serves global rental accounts for diesel and
gas generator sets.

Generator technologies - We design, manufacture, sell and
service A/C generator/alternator products internally as well as to
other generator set assemblers. Our products are sold under the
Stamford, AVK and Markon brands and range in output from 3
kilovolt-amperes (kVA) to 12,000 kVA.

Sales for our Power Generation segment by business (including 2015 and
2014 reorganized balances) were as follows: